Tuttle Enterprises is considering a project that has the following cash flow and WACC data.What is the project's NPV? Note that if a project's projected NPV is negative,it should be rejected. $$\begin{array} { l c c c c c }
\text { WACC: } & { 11.50 \% } & & & & \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
\hline \text { Cash flows } & - \$ 1,000 & \$ 350 & \$ 350 & \$ 350 & \$ 350
\end{array}$$
A) 084.03
B) 064.70
C) 059.49
D) 082.54
E) 074.36

Question

Tuttle Enterprises is considering a project that has the following cash flow and WACC data.What is the project's NPV? Note that if a project's projected NPV is negative,it should be rejected. $$\begin{array} { l c c c c c } 
\text { WACC: } & { 11.50 \% } & & & & \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
\hline  \text { Cash flows } & - \$ 1,000 & \$ 350 & \$ 350 & \$ 350 & \$ 350
\end{array}$$
A) 084.03
B) 064.70
C) 059.49
D) 082.54
E) 074.36

Quizplus · Accepted Answer

The Net Present Value (NPV) of a project is calculated by discounting the project's cash flows back to their present value using the Weighted Average Cost of Capital (WACC) as the discount rate, and then summing those present values. The formula for NPV is:$$ NPV = \sum \frac{CF_t}{(1 + WACC)^t} $$where $CF_t$ is the cash flow at time $t$, and $WACC$ is the Weighted Average Cost of Capital.Given:- WACC = 11.50% or 0.115- Year 0 cash flow = -$1,000- Year 1-4 cash flows = $350 each yearThe NPV calculation is as follows:$$ NPV = -\$1,000 + \frac{\$350}{(1 + 0.115)^1} + \frac{\$350}{(1 + 0.115)^2} + \frac{\$350}{(1 + 0.115)^3} + \frac{\$350}{(1 + 0.115)^4} $$$$ NPV = -\$1,000 + \$314.35 + \$282.03 + \$253.40 + \$227.58 $$$$ NPV = -\$1,000 + \$1,077.36 $$$$ NPV = \$77.36 $$The closest option to \$77.36 is E) \$74.36.

Tuttle Enterprises Is Considering a Project That Has the Following